15 May 2018 – Eje Prime
Change of tack in the office sector in Madrid. In 2016, 100% of the supply that was put on the market corresponded to renovated properties; just three years on, 60% of the office space handed over during the last 24 months has been newly built. The segment is, therefore, going to experience a metamorphosis over the next two years (…). Moreover, with the volume of leased surface area rising year after year, a significant increase is expected over the medium term in the number of square metres in total in the office stock in the Spanish capital, according to a report from the consultancy firm CBRE.
Thus, whilst in 2016, the new surface area created saw the introduction of 170,000 m2 into the stock that year, last year, 238,000 m2 of new space was created. In 2018 and 2019, office developers will dispense 255,000 m2, of which 153,000 m2 is going to correspond to new build properties.
These figures reflect the definitive return of the Socimis and funds to the construction of new office space in the office market, according to CBRE. In the case of Madrid, after 606,000 m2 of office space was leased during 2017 – the best year in the last decade – the report forecasts similar figures for this year.
In addition, traditional players, such as the Socimi Colonial and GMP, in which the Singapore sovereign fund has held a stake for several years, have been joined by other managers and companies that want to take advantage of the strong performance of the office market in the new real estate cycle, resuming projects that were parked due to the crisis. Such is the case of Iberdrola Inmobiliaria, the French firm Bouygues and Torre Rioja, amongst other companies.
In this sense, Colonial, which has now also reinforced this line of business with Axiare’s assets, has a project underway, Alpha III, in which it is going to invest €480 million between Madrid and Barcelona, highlighting the investment that it is going to make in the Méndez Álvaro area of the Spanish capital. In that southern stretch of the central business district (CBD), the Socimi is going to build more than 110,000 m2 of office space (…).
Barcelona: record year for the hand over of new offices
Whilst Madrid is getting ready to build offices, in Barcelona, developers are on the verge of handing over the newest spaces. The Catalan capital has been immersed in a construction phase that, in addition, has been sold at the speed of light. The majority of the new developments that are being carried out already have tenants, who have signed pre-lease contracts with the developers of the different projects.
Nevertheless, the greatest supply is being built in the 22@ district, the most-sought-after area at the moment by technology companies and large operators. As a result, in 2017, the Catalan capital recorded a 4% increase in the volume of space leased, to 344,000 m2, according to CBRE.
Boosted by this dynamic of constructing buildings in the city’s new hub, Barcelona will handover 170,000 m2 of new office space during 2018, which will represent the best surface area record since 2010 (…).
In recent months, several land transactions have been closed in the 22@ district for the development of new (office) projects. Perhaps the most noteworthy of all is Parc Central, a plot spanning 52,000 m2 for which Värde paid €50 million to Oaktree and Alza Real Estate. The fund will allocate just over 40,000 m2 of those plots, known as Can Ricard, to office buildings.
Madrid, the city in Europe where prime office rents will rise by the fastest
(…). Prime rents grew by 10% in Madrid in 2017 and by 8% in Barcelona, with average prices per square metre of €31/m2/month in the Spanish capital and €23.5/m2/month in the Mediterranean city.
In 2018, CBRE forecasts that Madrid is going to be the European city where prime rents are going to rise the most markedly with a growth forecast that could reach €34/m2/month on average, boosted by the CBD. Meanwhile, Barcelona is going to close this year as the fourth-ranked capital in Europe in terms of the increase in office rents, a rising trend that is going to continue in both cities until 2022.
Original story: Eje Prime (by J. Izquierdo)
Translation: Carmel Drake